INCOME TAXES

6 Months Ended

Jun. 30, 2012

INCOME TAXES [Abstract]

INCOME TAXES

(E) INCOME TAXES

The combined statutory federal and state income tax rates for UIL Holdings for the three and six month periods ended June 30, 2012 and 2011 were 40.9% and 40.4%, respectively. The increase in the combined statutory federal and state income tax rate for the 2012 periods was due to legislation enacted in Connecticut in 2011 which imposed an additional 10% surcharge on the corporation business tax, effective January 1, 2012.  This additional surcharge increased the statutory rate of the Connecticut corporation business tax from 8.25% to 9%.

Differences in the treatment of certain transactions for book and tax purposes occur which cause the rate of UIL Holdings' reported income tax expense to differ from the statutory tax rate described above.  The effective book income tax rates for the three and six month periods ended June 30, 2012 were 44.3% and 40.4%, respectively, as compared to 43.1% and 38.7% for each of the three and six month periods ended June 30, 2011.